County Fair and Agricultural Society Unrelated Business Income

To determine if an activity is subject to UBIT, the activity must be:

• A trade or business that is carried on to produce income from the sale of goods or performance of services
• Regularly carried on. Generally, activities are considered regularly carried on if they are conducted in a manner similar to comparable commercial activities of nonexempt organizations, including seasonal activities.
• Not substantially related to the accomplishment of the organization’s exempt purpose

Storage income for boats, cars, RVs, and other vehicles during the off-season is unrelated business income. Off-season is when the fair is not in session. The activity is considered regularly carried on because it is done during the season when for-profit storage companies also provide winter storage.

Income from renting RVs or campsites is subject to UBIT if the rental is not related to the organization’s business purposes.

For example, non-fair and non-mission RVs or campsites are subject to UBIT if RVs or campsites are rented to individuals who are:

• Attending concerts and festivals located in the area or on the fairgrounds
• Camping for recreation

If the rental is related to the organization’s business purposes, then it is not subject to UBIT. Examples include:

• Renting to exhibitors during the fair because it is related to the organization’s purpose of operating the fair
• Renting for various agricultural-related events held at the fairgrounds throughout the summer because it is related to the organization’s purpose of providing agricultural education

Rental income from real estate may be subject to UBIT depending on: 

• The type of event
• Whether or not there is a debt on the property
• Whether or not services were provided

Types of Events 

Events not related to the organization’s business purposes are subject to UBIT. Examples include auctions, weddings, parties, banquets, agricultural or fair-related events, and more.

Debt on the Property

If there is a debt on the property that’s being rented, the income is subject to UBIT.

For example, the organization has a debt on the property and rents out their facilities for birthday parties and other social events.

No Debt on the Property and No Services Provided

If there is no debt on the property and the organization does not provide services, the income is not subject to UBIT.

For example, the organization rents out their facilities located on the fairgrounds for weddings and other social events. There is no debt on the property and there are no services provided. The fee is strictly for the use of the building.

No Debt on the Property and Services Are Provided

If there is no debt on the property and the organization provides services, the income is subject to UBIT.

Services may include cleaning the space afterwards, providing staff such as bartenders, party planners, or security, or providing food or beverages. Here are two examples:

• The organization provides setup and cleanup for all banquets or parties held at their facility, which is considered providing a service to the renter
• The organization holds a liquor license and provides a bartender for all weddings that choose to serve alcohol

Rental income from personal property, such as chairs, tables, bleachers, and other equipment, may be subject to UBIT.

If the rental is not related to the organization’s mission or business purposes, it is subject to UBIT. For example, renting chairs and tables for a wedding in addition to the facility rental fee is subject to UBIT.

If the rental is related to the organization’s mission or business purposes, it is not subject to UBIT. For example, renting chairs and tables to the local 4-H group for their monthly meeting is not unrelated income because it is related to the organization’s charitable mission.

You must file two forms:

• Minnesota Form M4NP, Unrelated Business Income Tax Return
• IRS Form 990-T, Exempt Organization Business Income Tax Return
   

The due date to file state Form M4NP and federal Form 990-T is the 15th day of the fifth month after the end of the tax year.

For example, if your tax year ended Dec. 31, 2023, the tax returns are due May 15, 2024.

Automatic Filing Extension

All organizations are granted an automatic seven-month extension to file Form M4NP. You are not required to submit a form to us to receive a filing extension.

Note: This is a filing extension only, not a payment extension. Any tax not paid in full by the regular due date is subject to penalties and interest.